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Research finds growth in wholly owned housing companies

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Almost two-thirds of councils are directly involved in building homes with nearly half having set up a wholly owned company to do so, new research by the Royal Town Planning Institute has found.

A survey of 197 authorities found 65% were building homes either through their housing revenue account, using their general funds, or through a wholly owned local housing company. The survey found 44% of councils now had a wholly owned housing company with 30 set up in 2017 alone.

The research found the councils that had delivered the most homes through a wholly owned company so far were Eastbourne, Blackpool, Telford & Wrekin, and Stevenage BCs, Gateshead and Stockport MBCs and South Norfolk and Staffordshire Moorlands DCs.

The Local Authority Direct Provision of Housing study was conducted by Professor Janice Morphet and Dr Ben Clifford of the Bartlett School of Planning, University College London.

It found that even those councils not directly involved in building homes were often contributing to the provision of housing through joint ventures with developers, providing land for housing, loans to others to build housing - including arm’s length management organisations and housing associations - and building for social needs such as extra care housing.

When these categories were included the research found 91% of authorities were involved in providing homes.

Professor Morphet said: “Public sector housebuilding today has evolved into a more dynamic and diversified activity. Austerity, market forces and the political landscape have prompted councils to return to housing provision with a wider remit. Affordable and social housing remains at the core, but many other tenure types and activities are going on to serve different local needs.”

The report cites the HRA borrowing cap and the lack of land as the main barriers to councils building new homes and calls on the government to remove the debt cap and value council housing stock at market rates.

At the Budget last month the chancellor announced plans to allow councils to bid to lift the borrowing cap by up to £1bn over the three years from 2019-20.

RTPI president Stephen Wilkinson, who is head of planning & strategic partnerships at the Lee Valley Regional Park Authority, said: “The chancellor’s move to lift the HRA cap will have some positive impact, but this needs to be rolled out more widely and quickly. We also need more drastic measures to help councils access land at the right price to develop themselves or sell to earn the income they need.”

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